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China factory activity shrinks to six and a half year low as orders tumble
- RachelF 11y agoThis is big news, as it might signal that the Chinese economy is coming in for a hard landing.
- 1971genocide 11y agoThis is bad new for everyone. China's economy is a the only thing that is driving global demand - at least for the last few years after the financial crisis.
- lucaspiller 11y agoFrom what I've read on Reddit (so take it with a grain of salt), a lot of companies have recently been switching from having their goods manufactured in China to in the U.S. Due to falling oil prices it doesn't work out much more expensive, and the benefits from not having to wait 6+ weeks for a shipment that may or may not be correct out weight the price difference.
- maxerickson 11y agoThe big difference in cost between US manufacturing and China manufacturing is labor, and then probably government subsidies. Low oil prices favor China. Increasing labor costs in China and the strengthening of the Yuan (not the recent move, the 10 year trend) are probably the primary things driving manufacturing back to the US.
- aembleton 11y agoWith fracking, the US has lower energy costs than China: http://www.bloomberg.com/bw/articles/2014-04-25/china-vs-dot-the-u-dot-s-dot-its-just-as-cheap-to-make-goods-in-the-u-dot-s-dot-a http://www.bloomberg.com/bw/articles/2014-04-25/china-vs-dot...
- maxerickson 11y agoRight, my argument is that energy is not the most important difference. It may well be that the recent energy price moves are the thing that finally tipped the scales, but better wages in China as the economy there has expanded (along with soft wage growth in the US) have had a much bigger impact when you look at the last couple of decades.
- Asbostos 11y agoApart from naive tribalism, is there any reason people so interested in "driving manufacturing back to the US"? Isn't it better to let it happen in whatever country buyers prefer to buy from? Maybe America doesn't need to make so many low-tech products anymore. Maybe it can cope with ongoing unemployment better than China can.
- Implicated 11y ago> Apart from naive tribalism, is there any reason people so interested in "driving manufacturing back to the US"? Stimulating local economy?
- saiya-jin 11y agothat is interesting only if you are US resident, which many of us are not :)
- hga 11y agoWhat does "Made in China" vs. "Made in the USA" say to you?
- marcosdumay 11y agoWell, the people interested in "driving manufacturing back to the US" are mostly US residents.
- electricblue 11y agoThe US has regulations. China does too but they enforce them...selectively.
- moistgorilla 11y agoMore local manufacturing means more local jobs.
- dredmorbius 11y agoSupply chain contagion. David Korowicz. http://www.feasta.org/2012/06/17/trade-off-financial-system-supply-chain-cross-contagion-a-study-in-global-systemic-collapse/ http://www.feasta.org/2012/06/17/trade-off-financial-system-...
- sdm 11y agoSome small part have but it's a minority. Manufacturing has been moving out of China for the past 10 years at an increasingly rapid pace. It's going to ASEAN nations who together have been working hard at becoming the next "factory of the world". Far more factories have moved from China to Vietnam than China to the US. If China has gotten to expensive for you than the US is as well too.
- tonyedgecombe 11y agoNo it isn't, most of the developed world doesn't export much to China. The only countries likely to suffer are natural resource exporters.
- digitalzombie 11y agoAnd autocompanies, they've been making bank from the rising middle class. American automakers have made good money in that market and many other companies have had exclusive special edition for Chinese market. The one company that couldn't make bank is Tesla, I have no idea why probably market team not being able to adapt to the culture over there.
- khuey 11y agoAnd they've already taken a decent hit. Look at the AUD.
- zajd 11y agoPeople have been saying this about every negative economic indicator coming out of China for the past decade
- seanmcdirmid 11y agoThe market can stay irrational for a long time. The only question has ever been "when" not "if".
- rhino369 11y agoIt might also signal a global recession.
- rm_-rf_slash 11y agoFirst off, China has been getting more and more expensive over the years as their labor costs rose and other developing countries started playing the same game. Even Chinese companies outsource to Vietnam, Bangladesh, etc. Second, China's bigger problem is that they lack sex, and that's not just a dig at the one child policy. Sure, they have some lovely trains and airports, but nobody says "I buy Vietnamese so someday I can buy Chinese." They say "I buy Chinese so someday I can buy German." China is simply not an aspirational brand. They have plenty of businesses that mirror the West (Weibo for Twitter, Renren for Facebook, etc) which are highly popular among Chinese (because the government often gives them no other choice), but are little more than an eye-roll outside the Middle Kingdom. Classic middle income trap scenario: too rich to compete by making things cheap, too lame to compete on the high end. I would be interested in hearing a rebuttal, but so far I have been unable to find one, on HN or otherwise. Edit: Downvoting without giving an explanation doesn't count as a rebuttal. In fact I'm not entirely sure what effect it is supposed to have, aside from making you feel less insecure about your own opinions ;)
- crocal 11y agoCounter argument rather than rebutal. What you describe does not take into account the possibility to have internal market pick up. "Sexy" can be counterbalanced by willingness to buy the local brand, because more atuned to local tastes and for patriotic reasons. It certainly happened in USA and Europe.
- imglorp 11y agoAlso, a sexy brand or product could arise at any time. You just need the right company with the right leader who can read the people correctly and give them something culturally appealing with taste and design. The next Jobs is probably around the corner, and he might be Chinese.
- rm_-rf_slash 11y agoSee my other response for a more verbose questioning of whether the communist party is ready to handle someone who wants to "Think Different."
- pc2g4d 11y agoMaybe this downturn isn't actually a huge deal? Wait until the quarterly service sector numbers next come out and see if they follow suit.